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    Wagers ACC 101 Answers To Practice 8 - Receivables

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    bhevsz009
    1) The document provides three practice problems and requirements for journal entries related to uncollectible accounts receivable and notes receivable. 2) For the first problem, entries are given to write off and recover a receivable, and to estimate bad debt expense at year-end. 3) The second problem requires entries for notes receivable, including receipt of a note, its payment, making a loan, and recording interest. 4) The third problem concludes with the borrower filing for bankruptcy, resulting in writing off the receivable.

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    Wagers ACC 101 Answers To Practice 8 - Receivables

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    bhevsz009
    117 views3 pages
    1) The document provides three practice problems and requirements for journal entries related to uncollectible accounts receivable and notes receivable. 2) For the first problem, entries are given to write off and recover a receivable, and to estimate bad debt expense at year-end. 3) The second problem requires entries for notes receivable, including receipt of a note, its payment, making a loan, and recording interest. 4) The third problem concludes with the borrower filing for bankruptcy, resulting in writing off the receivable.

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    Wagers ACC 101 Answers to Practice 8 - Receivables

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    1) The document provides three practice problems and requirements for journal entries related to uncollectible accounts receivable and notes receivable. 2) For the first problem, entries are given to write off and recover a receivable, and to estimate bad debt expense at year-end. 3) The second problem requires entries for notes receivable, including receipt of a note, its payment, making a loan, and recording interest. 4) The third problem concludes with the borrower filing for bankruptcy, resulting in writing off the receivable.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    117 views3 pages

    Wagers ACC 101 Answers To Practice 8 - Receivables

    Uploaded by

    bhevsz009
    1) The document provides three practice problems and requirements for journal entries related to uncollectible accounts receivable and notes receivable. 2) For the first problem, entries are given to write off and recover a receivable, and to estimate bad debt expense at year-end. 3) The second problem requires entries for notes receivable, including receipt of a note, its payment, making a loan, and recording interest. 4) The third problem concludes with the borrower filing for bankruptcy, resulting in writing off the receivable.

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    of 3

    ACC 101 - WAGERS ANSWERS TO EXTRA PRACTICE PROBLEMS FOR CHAPTER 8

    PRACTICE PROBLEM: UNCOLLECTIBLE ACCOUNTS RECEIVABLE


    Beginning balances for the year 2013 are as follows for Acme Company, which uses the allowance method: Accounts Receivable $800,000 Allowance for Doubtful Accounts (credit balance) $10,000 Requirement 1: On July 31, 2013, record the journal entry to write off a $7,000 receivable of Mr. Jones that cannot be collected. Allowance for Doubtful Accounts Accounts Receivable, Mr. Jones 7,000 7,000

    Requirement 2: On October 31, 2013, record the journal entry to record the recovery of a $2,000 receivable from Mr. Jones (the receivable that was written off in the previous entry.) Accounts Receivable, Mr. Jones Allowance for Doubtful Accounts Cash Accounts Receivable, Mr. Jones 2,000 2,000 2,000 2,000

    Requirement 3: As of December 31, 2013, record the journal entry to estimate Bad Debt Expense. Year-end receivables are categorized as follows: Amount $500,000 200,000 93,000 $793,000 % Uncoll. .05% 1% 6% Amount Uncoll. $250 2,000 5,580 $7,830

    Current 1-30 days past due More than 30 days past due

    ACC 101 Wagers Answers to Extra Practice Problems for Chapter 8 Page 2 of 3

    PRACTICE PROBLEM: UNCOLLECTIBLE ACCOUNTS RECEIVABLE (continued)


    Notice that the current balance in Accounts Receivable (after entries from Requirements 1 and 3 are posted) is now $793,000, which equals the total above. ACCOUNTS RECEIVABLE Beginning balance 800,000 7,000 Write-off Recovery 2,000 2,000 Recovery Ending balance 793,000 Current balance in Allowance account (after entries from Requirements 1 and 2 are recorded) ALLOWANCE FOR DOUBTFUL ACCOUNTS 10,000 Beginning balance Write-off 7,000 2,000 Recovery 5,000 Ending balance Desired ending balance in Allowance account (from aging schedule) = $7,830 ALLOWANCE FOR DOUBTFUL ACCOUNTS 5,000 Balance (from above) 2,830 Adjustment required 7,830 Desired ending balance Journal entry: Bad Debt Expense Allowance for Doubtful Accounts 2,830 2,830

    ACC 101 Wagers Answers to Extra Practice Problems for Chapter 8 Page 3 of 3

    PRACTICE PROBLEM: NOTE RECEIVABLE


    Requirement 1: Prepare the journal entries required as follows: Nov 1, 2015 We receive a $100,000, 30-day, 20% promissory note in settlement of an open account receivable (from Broke Bob, who cant pay us) 100,000 100,000

    Note Receivable Accounts Receivable Dec 1, 2015 Cash Broke Bob pays us the amount he owes

    101,666.67 Note Receivable Interest Income ($100,000 * 20% * 30/360) 100,000.00 1,666.67

    Dec 26, 2015 We make a $200,000 loan to Honest Al and receive a 60-day, 16% promissory note Note Receivable Cash Dec 31, 2015 We record any adjusting entries required Interest Receivable Interest Income ($200,000 * 16% * 5/360) 444.44 444.44 200,000 200,000

    Feb 24, 2016 Honest Al isnt so honest he doesnt pay us! Accounts Receivable 205,333.33 Note Receivable 200,000.00 Interest Receivable 444.44 Interest Income ($200,000 * 16% * 55/360) 4,888.89 Mar 31, 2016 Honest Al files for bankruptcy and we write off his account as uncollectible (assume we use the allowance method) Allowance for Doubtful Accounts Accounts Receivable 205,333.33 205,333.33

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